Big pickups are big problem for dealers
Big pickup trucks are clogging many U.S. dealer lots, causing headaches for General Motors and other automakers and raising concerns about price wars and lower profits later in the year.
GM has garnered much of the attention for its inventory of Chevrolet Silverado and GMC Sierra full-size trucks that stood at 122 days at the end of June. That’s about 50 percent higher than the 80 days typically preferred and above the industry’s still-hefty average of 99 days, according to Ward’s Auto.
Chrysler and Toyota also lag at 93 days’ supply, while Ford stood at 79, Ward’s said.
“Do we have high inventory levels for full-size trucks? Yes. Is it a major issue? It’s not at crisis level, but it’s above healthy levels,” said analyst Jesse Toprak with online car-buying research website TrueCar last week.
What makes analysts and industry officials most nervous is whether the U.S. economy will depress the usual surge in demand in the second-half. GM raises the most concern with the high number of trucks on its dealer lots.
Buckingham Research analyst Joseph Amaturo already believes GM will boost its deals, increasing incentive spending by September by about $700 per vehicle. That would match levels seen in January and February, when the No. 1 U.S. automaker was heavily criticized for being too generous.
Don Johnson, GM’s U.S. sales chief, said on Friday that a production stoppage for two weeks in July at the company’s pickup truck plants and an increase in second-half sales will help lower the inventory level. He also said GM will not get aggressive with incentives.